Worst Year in Ten

Economic torpor this year has gripped not only Britain but also much of continental Europe. Braked by West Germany's first major postwar recession and by sluggish business in France, the Common Market is headed for the slowest expansion in its ten-year history. In its third quarterly report, the Brussels-based EEC Commission has just concluded that the total output of goods and services in the Six will rise only 2 1/2% in 1967, after discounting inflation.

That prospective performance compares with a 4% growth last year, which was the worst since the Common Market's first full year. Earlier this year, EEC experts predicted a slowdown of lesser proportions. The German recession, however, proved more durable than anticipated; despite recent frantic efforts to revive business, a fifth of Germany's industrial capacity stands idle. This year, the country's gross national product is expected to drop about 1%.

As for France, many analysts feel that the country's economic planners misjudged the economic trend and kept wage-and-price-stabilization rules in force too long. Twice this year, Finance Minister Michel Debre has been forced to lower his goal for economic growth, first from 6% to 5% and most recently to 4.2%. Wage rates are now rising faster than production and prices are climbing, despite a 41% rise in unemployment (to 212,800) over the past twelve months. Among the Six, only Italy enjoys a vigorously expanding economy, with prospects for a 6% growth this year amid stable wages and prices and rising factory output.

Still, the EEC Commission predicts that during 1968 expansive government policies will produce a rebound--weak at first but picking up in the second six months to give the Common Market a 4 1/2% growth for the year. At the same time, says the commission, "imports will probably increase significantly." If so, both the U.S. and Britain stand to benefit from export sales--a welcome prospect because it would ease their balance-of-payments troubles.

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